Question
I have a quick question in regards to management accounting 16 edition Chapter 13 Problem 77. I read the answer on here yet it just
I have a quick question in regards to management accounting 16 edition Chapter 13 Problem 77. I read the answer on here yet it just doesnt add up in terms of compute the average variable cost of goods sold percentage or compute the average contribution margin percentage.
This is what I have so far:
2.
The total revenue by Dell for the financial year after looking at the management discussion and analysis of the financial statements was $56,940. Overall, there was a change of 10% from last year financials. The reason this change occurred was the decrease in the revenue from customer segment. Furthermore, all the segments experienced declines in revenue. Of course, the declines were also caused by competitive pricing dynamics and increase competition from alternative devices such as smart phones and I-Pads.
3. Assume that $3 billion of operating expense in addition to the depreciation and amortization are all the fixed expenses, Compute the average variable cost of goods sold percentage. Compute the average contribution margin percentage. What would be the break-even sales dollars under this scenario? Does this seem reasonable, given the current operating income reported by the firm?
On the review of the most recent consolidated statement of operations for Dell I found that the total cost of goods sold was $ 44,754 million and the selling, administrative, and engineering expenses were $ 9,174 million. Looking further into the recent statement I also found that the depreciation and amortization expenses for the current year were $ 1,144.
Now assuming that 3 billion of operating expense in addition to the depreciation and amortization are all fixed expenses, I computed the average variable cost of goods sold percentage. The fact is the variable cost is included in the cost of goods sold, administrative expenses, engineering expenses, and the operating expenses.
Therefore, the average contribution margin percentage:
I can not figure out the answers to Number 3 and being able to show the work.
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